Covalent modification by isoprenoid lipids (prenylation) is an important component in the localization and activity of many proteins involved in cellular signaling. The majority of prenylated proteins belong to a group of proteins tenned "CaaX proteins" that are defined by a specific C terminal motif that directs their modification. CaaX prenyl proteins, which include most members oi the Ras family of GTP-binding proteins (0 proteins), play critical roles in a number of cellular processes, including transmembrane signaling, intracellular membrane trafficking, and oncogenesis. The long-term goals of this research project have been to elucidate the biochemistry of protein prenylation. This initially involved identification of the two enzymes, termed CaaX prenyltransferases, responsible for the modification. Work on these enzymes, protein farnesyltransferase (FTase) and protein geranylgeranyltransferase type I (GGTase-I), has now moved into detailed structure-function analyses guided by the emerging structural information. A mammalian CaaX protease, termed Rce1, has been identified and shown to be responsible for the post-prenylation processing of all Ras isoforms and many other CaaX proteins. A Rce1 knockout mouse has been generated, and studies on cells derived from the mice indicate that Ras function is impaired if the proteolysis step is blocked. A detailed characterization of Rce1 is being undertaken that focuses on defining the catalytic mechamsn and membrane topology of the enzyme. A novel splice variant of Rce1, Rce1B, is also being studied to determine if the two variants play distinct roles in CaaX proteolysis. A lysosomal enzyme tha degrades specific prenylcysteines produced during metabolic turnover of prenyl proteins has been identified. This enzyme, termed prenylcysteine lyase (PCLase), utilizes an unusual oxidative mechanism to cleave thioether bonds. Cell-based systems wifi be developed to directly test the hypothesis that PCLase plays a critical role in the cellular metabolism of prenylcysteines. Continuec elucidation of the molecular mechanisms of protein prenylation should greatly facilitate investigations into the importance of this process in cellular signaling events and oncogenesis.